HELOC Borrowing Power Calculator
Estimate how much equity you can access from your home.
How a HELOC Calculator Works
A Home Equity Line of Credit (HELOC) is a revolving credit line that uses your home as collateral. Unlike a traditional home equity loan, which provides a lump sum, a HELOC allows you to withdraw funds as needed, up to a specific limit. To determine that limit, lenders use a formula based on your Combined Loan-to-Value (CLTV) ratio.
Lenders typically allow you to borrow up to 80% to 90% of your home's appraised value, minus what you still owe on your primary mortgage. This calculator automates that math to show you the "gap" available for your credit line.
The HELOC Formula
The standard calculation used by banks is:
(Home Value × Maximum LTV %) – Current Mortgage Balance = Maximum HELOC Amount
Realistic Example
Imagine your home is worth $400,000 and you owe $250,000 on your first mortgage. If your lender has an 85% LTV limit:
- Step 1: Calculate the maximum total debt allowed: $400,000 × 0.85 = $340,000.
- Step 2: Subtract existing debt: $340,000 – $250,000 = $90,000.
- Result: Your maximum HELOC limit would be $90,000.
Key Factors Lenders Consider
- Credit Score: Most lenders require a score of 680 or higher for the best rates and higher LTV limits.
- Debt-to-Income (DTI) Ratio: Your total monthly debt payments (including the new HELOC) usually shouldn't exceed 43% of your gross monthly income.
- Home Appraisal: While online estimates help, a professional appraisal will ultimately determine the official home value used for the loan.
- Draw Period vs. Repayment Period: HELOCs usually have a 10-year draw period where you pay interest only, followed by a 15-20 year repayment period.
Common Uses for a HELOC
Because HELOC interest rates are generally lower than credit cards or personal loans, they are frequently used for:
- Home Improvements: Investing back into your asset to increase its value.
- Debt Consolidation: Paying off high-interest credit cards with a lower-interest line.
- Emergency Fund: Having a safety net available for unexpected major expenses.
- Education Costs: Funding tuition with a flexible payment schedule.
Estimated Credit: $0
" +
"Based on your current mortgage balance and the LTV limit, you do not have enough equity to open a HELOC at this time.";
} else {
var formattedLine = maxAvailableLine.toLocaleString('en-US', {style: 'currency', currency: 'USD', maximumFractionDigits: 0});
var formattedTotal = totalBorrowingPower.toLocaleString('en-US', {style: 'currency', currency: 'USD', maximumFractionDigits: 0});
var resultHTML = "Max Available HELOC: " + formattedLine + "
";
resultHTML += "This is based on a " + ltvPercentage + "% LTV limit, which allows for a total combined debt of " + formattedTotal + ".";
if (!isNaN(desiredLine) && desiredLine > 0) {
if (desiredLine <= maxAvailableLine) {
resultHTML += "✓ Your desired amount of $" + desiredLine.toLocaleString() + " is within your estimated limit.";
} else {
resultHTML += "⚠ Your desired amount of $" + desiredLine.toLocaleString() + " exceeds your estimated limit by " + (desiredLine – maxAvailableLine).toLocaleString('en-US', {style: 'currency', currency: 'USD', maximumFractionDigits: 0}) + ".";
}
}
outputDiv.innerHTML = resultHTML;
}
// Scroll to result on mobile
displayBox.scrollIntoView({ behavior: 'smooth', block: 'nearest' });
}